Question

in a _____ review system, orders are placed at a constant time interval, but in a ______ review system, a constant order is placed at a variable time level.

periodic, fixed time

periodic, continous

continous, periodic

continous, monthly

which of the following is not a purpose of inventory?

to protect against uncertainties

to cover anticipated changed in demand

to allow economic production and purchase

to decrease obsolescense

a company using the basic EOQ model has annual _____ costs equal to annual ______ costs.

ordering, shortage

inventory holding, shortage

ordering, inventory holding

inventory holding, back order

Answer 1

1. Answer: periodic, continous

In the case of the Periodic review system, orders are placed at fixed time intervals.

In the case of the Continous review system, orders are placed when the inventory falls to a certain level. Hence, orders are placed at variable time intervals.

2. Answer: to decrease obsolescence

Inventory is required to safeguard organizations against uncertainties, changes in demand, etc and to maintain economical purchase and production levels.

To decrease obsolescence is not the purpose of the inventory.

3. Answer: ordering, inventory holding

In the basic EOQ model, the annual ordering costs are equal to the annual inventory holding costs. The EOQ model minimizes the total cost by balancing the annual ordering cost and the annual inventory holding cost.